Oil/gas lease

[NewToy]

I have been approached by an oil drilling outfit regarding a 2.5 acre parcel of property I own. The drilling is going to happen on a neighbors 50 acre parcel and they have given me a "Non-drilling Lease" to review. Has anyone had any experience with these and if so what are the pro's / con's? I have a rental unit on the property and live down the road a piece. They have done a seismic study out this way recently and they feel confident that there are favorable conditions for finding oil and gas.
John

 

[RonR]

Well, not sure this will help you or not. We inherited some mineral rights on over 5,000 acres of TX land many years ago. Darn, I thought I might be rich. Then I read how much we owned, and it was like 1/275,000 share in it, so it wasn't much.

I'm not familiar with a 'non-drilling' lease, but my guess is it will keep your property from exploration. It will pay you a little to assure that your neighbor gets more.............

And likely if this area is in play, you will receive offers out the kazoo from people wanting to buy your rights, or lease from you.

Almost yearly, we receive unsolicited offers that amount to about 4 yrs of our current royalites. We haven't considered any of them.

Royalty stuff is a PITA to compute on tax forms (easy is you use a CPA I suppose).

The one thing you can count on is the guys doing it are looking out for Number One --THEMSELVES.

I suggest you find a local expert, maybe a lawyer who deals in royalties and leases to gain some insite. It might earn you some more money. Rest assured, the offer you received is not the best one out there, even from this same company...........

Hope this helps ya.

Ron

 

[EddieWalker]

I have some mineral rights on my land was aproached about leasing the mineral rights to my land. I talked to a lawyer about it and it was a win/win situation in my case.

What happens is the drilling company buys up the rights to a section of land, 640 acres. Then everyone in that section who owns the rights to the minerarals is included to the lease fees and a portion of the profits depending on how much of a share you own. Mine is very minimal.

If I refused to sell them the rights to my minerals, they could still drill as I don't have enough to stop them. They only need a certain percentage of the owners permission to drill. They already had more than they needed and I was just a formality. If I said no, it wouldn't matter, they would still have control of it and could drill anyway. I'd just miss out on a little cash.

They did it in a three year term with a two year renewal. I just got the check fo the renewal. Fist three years was over $800 and the two years was over $500.

They cannot drill on my land or even come onto it. They can drill under it, or around it, but that's it. So far, nothing has happened, and it's doubtfull that it will in the next two years, but if it does, who knows what that will mean.

Eddie

 

[NewToy]

The way I read this lease agreement if I sign I will allow them access to the property for everything but the actual drilling. They (if I agree) will have the right to put tanks and/or lines on my property. The contract says any tanks would have to be at least 200' from any dwellings or barns. It also states that I would be able to have free gas if I ran the lines to the house. I suppose it would be wise to consult an attorney. I would hate to have the drilling rig and employees passing through at all hours disturbing my renters. They have been good folks and I wouldn't want to compromise their peace and quiet for a few hundred bucks a year.
Thanks,
John

 

[CharlieTR]

My friend lives just North of Fort Worth, there is a lot a shale and the gas wells are popping up all over. He has no problems, and gets several hundred a month. But some people that live close to the large installations (I have no idea what those strange looking plants are) have a real problem. They smell really bad. If the wind is blowing towards them they almost have to leave.